ISLAMABAD: The country’s five refineries have protested with chairman Oil and Gas Regulatory Authority (OGRA) for allowing the import of HSD to M/s Gas and Oil Pakistan’s (GO), instead of urging OMCs to uplift the locally-produced HSD and MOGAS.
In a joint letter to OGRA Chairman Masroor Khan, top men of ARL, CNEGRGYICO PK Limited, NRL, PRL and PARL have cited reference of their joint letter of May 23, 2024, wherein, all refineries raised their concerns regarding challenges in product off-takes, directly resulting from the failure of OMCs to uplift the committed quantities of HSD and MOGAS especially during past two months.
In this regard, all refineries had requested Chairman OGRA to direct OMCs to uplift the committee quantities of POL product from refineries being essential for the smooth refineries’ operations and only the actual deficit volumes to be imported.
It was in this context that M/s. Gas & Oil Pakistan’s (GO) request for the import of 15,000 MT of HSD during June 2024 was opposed by all refineries in view of availability of excessive HSD stocks with refineries, and was not allowed as is also evident from the import plan of HSD finalized and shared through product review minutes issued by OGRA in its letter of June 11, 2024.
Refineries have claimed that contrary to this, it has come to our notice that OGRA in total disregard to the decision taken during the Product Review Meeting through an e-mail dated June 12, 2024 in response to GO request dated June 10, 2024 has allowed GO to import 15,000 tons of HSD on the pretext of stock building/sales during month of June 2024, which is most disappointing.
The fact remains the refineries which are already struggling from the free flow of smuggled product, and also carrying huge inventories of HSD have once again been punished with unabated imports in the country.
M/s GO has preferred to import HSD instead of uplifting the same from the local refineries without any valid reason.
Refineries are of the view that OGRA would have been well within its right to have allowed imports in the country to any OMC had the refineries not willing to cater to the needs of GO or any other OMC, adding that yet imports over local availability were preferred by OGRA in spite of the decision taken earlier.
We also disagree with OGRA’s letter of June 04, 2024, in response to Joint Refineries letter of May 23, 2024 regarding offering competitive commercial terms to OMCs to be able to reap the benefit of Rule 35(g) of Pakistan Oil (Refining, Blending, Transportation, Storage, and Marketing) Rules 2016. Unfortunately, linking the enforceability of Rule 35(g) to any commercial arrangement as envisaged by OGRA defeats the essence and purpose of the above Rule and gives a blanket approval for imports to any OMCs at the cost of country’s precious foreign exchange thus compromising on country’s energy security.
“It is essential to ensure upliftment of local refineries product before allowing any MOGAS/HSD imports as clearly envisaged under Rule 35(g) of Pakistan Oil (Refining, Blending, Transportation, Storage, and Marketing) Rules 2016,” said the refineries. Keeping in view the volatile market conditions, available stocks of MOGAS/HSD with the Refineries, they have asked OGRA to revisit its decision for allowing imports of HSD to M/s GO and direct the OMCs, including M/s. GO, to first ensure upliftment of their required POL Product committed quantities from refineries before seeking import permission.
OGRA being the regulator should also ensure that all OMCs are maintaining their mandatory 20 days’ stock cover as per OGRA License conditions first through local uplifting. “We reiterate that this is crucial for sustainable operation of refineries and MOGAS and HSD imports should only be allowed to the extent of actual deficit quantities,” Refineries said, adding that they are “Strategic Assets” of Pakistan and their sustainability and continuity is essential for the prosperity and economic development of country.
Refineries are also of the view that local refineries are the backbone of heavy industrial development and are intrinsically connected to defense and energy security needs of the country, any blind reliance on imported fuels will not only increase risk to the country’s energy supply chain but has the potential to result in disastrous consequences.
“Refineries are already faced with serious storage constraints due low upliftment of products due to smuggling and economic turn down and are forced to operate at lower capacity and at times are even forced to shut down. Now on top of that allowing import of HSD under suspicious circumstances is no less than stabbing refineries in the back,” said Chairman OCAC Adil Khattak.
According to him, refineries have also noted some anomalies in the budget proposals but we will take them separately and hope they would be corrected.
Copyright Business Recorder, 2024
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